Acerus Pharmaceuticals (TSX:ASP | OTCQB:ASPCF): Building a sustainable, value-driven company

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A TSX-listed commercial-stage pharmaceutical company, Acerus Pharmaceuticals has a vision to become a leading specialty pharmaceutical company focused on urology and Men’s Health with its nasal testosterone treatment, Natesto.

Founded in 2009 and listed on the TSX (ASP) and the OTCQB (ASPCF), Acerus Pharmaceuticals is a micro-cap with a market cap of $50m CAD as of August 25th 2020. Company President and CEO Ed Gudaitis has held numerous senior positions in multi-national pharmaceutical companies, working in both Canada and the United States, and has been responsible throughout his career for launching and building billion-dollar pharmaceutical product franchises and country operations. Mr Gudaitis discusses Natesto, the firm’s disruptive technology that can potentially secure significant share in a more than $1 billion USD global market, the unique opportunity available to potential investors in the company, and Acerus’ vision to become a leading specialty pharmaceutical company in urology and Men’s Health.

Nasal testosterone

“Acerus is a commercial-stage specialty pharmaceutical company,” Mr Gudaitis explains. “We have an approved product on the market that we are commercializing, and our focus of effort is on specialists, not primary care physicians.”

Although the company is based in Ontario, Canada, its business is global. The company manufacturers and commercializes its core product, Natesto, in a number of global markets, including the US, Canada, South Korea, and Taiwan, with plans to move into Europe in the next eighteen months.

“In the US and Canada we commercialize the product directly through our own sales and marketing efforts, while in South Korea and Taiwan, and eventually in Europe, we commercialize through partnerships with local operating companies.”

Unlike some other companies in the specialty pharma space, Acerus is not built on licensing in other people’s assets. Acerus’ focus is on manufacturing and commercializing its core product in-house, making it a unique proposition as a company.

“We’ve been around for a while. Formed in 2009, the company has gone through a couple of iterations of strategy. It was previously called the Trimel Pharmaceuticals company, and it was structured to capitalize on a core technology, our nasal gel technology, which enables us to deliver products in a unique, patient-friendly manner.”

The problem that the company looks to solve is a very unique. Our primary market opportunity is the treatment of low testosterone, otherwise known as male hypogonadism. Around 14 million US males potentially have low testosterone, making a sizeable possible market.

“It’s about a $1bn USD prescription product market opportunity in the United States, with about 7 million prescriptions written per year. There are products that exist today, however there is no truly ideal product in the market place. There are a number of products with challenges in terms of how they’re delivered.”

The main options in the market for low testosterone currently are testosterone injections, deep and painful injections with a large needle, presenting challenges with self-injection. There are also topical gels, which act like a skin lotion that you rub in each day.

“With the topical gels, you have to worry about potentially transferring the product to your spouse or your children,” Mr Gudaitis explains. “After you apply the product to your body, you have to let it dry for twenty minutes, it can absorb differentially and not evenly all the time. As a result, there are several challenges with existing products in this market.”

It is estimated that up to 70% of patients on prescription treatments for low testosterone will switch therapy at least once to look for better options, as patients and their physicians are unsatisfied with the current treatments available.

“Prescription treatment of low testosterone is a very large market that has been well established. Physicians know how to diagnose, treat and prescribe low testosterone treatments. However, there is no single ideal product in the market. We think we can solve a number of problems within this large market, providing a patient-friendly, safer, effective alternative in a very large and growing market opportunity.”

Acerus’ unique technology creates a different product than any other in the market for testosterone treatment, an intra-nasal gel application of testosterone applied with a small dispenser three times a day on the inside of your nostril.

“It’s a little bit like a topical hand lotion that you would put on your hand. It’s a gel, not a spray, applied with our dispenser on the inside of your nasal cavity. The product is rapidly absorbed, highly effective, with low side effects.”

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“With the topical gels, you have to worry about potentially transferring the product to your spouse or your children” - Mr Gudaitis

Unsatisfied market

The uniqueness of this nasal testosterone technology offers investors an exciting opportunity to invest in a company with a highly differentiated, unique product offering.  The technology is an Acerus propriety technology, which was licensed in by Acerus, protected by a strong patent strategy.

“The Intellectual Property in the US, Canada and Europe is very long-ranging. We have a current suite of patents that would take us into the mid-2020s. We have new patent filings and strategies that we’re actively working that would take patent protection into the early and potentially the late-2030s. We have a unique technology and a solid IP platform to work from.”

This means the company has a ten or twelve year run in front of it with a very large, unsatisfied market opportunity to be capitalized on. This opportunity is primarily in the United States, but there is also significant market opportunity in the Canadian and European markets.

“If investors are looking for an opportunity,” Mr Gudaitis says, “we’ve got all the pieces in place, we now need to execute and deliver on the opportunity that’s there. We’ve got a better product, in a large market that’s unsatisfied – let’s go and make it happen.”

The company’s management team is made up of Mr Gudaitis, who has been in the pharmaceutical business for over 25 years, and new additions who bring relevant expertise within the US pharmaceutical market – Chief Medical Officer Dr Chris Sorli and US Commercial Leader Kevin Hickey.

“I spent about eleven years with Gilead Sciences as part of my career journey, some of that here in Canada building the Canadian operation from scratch to about a $1.2bn CAD business, but also in the US, where I was Senior Director for HIV marketing for a number of years, launching several large HIV products in the US.”

Dr Sorli is a board certified US-based endocrinologist and is responsible for the company’s medical affairs and R&D activities. His background is in diabetes, metabolism and Men’s Health.  He has previously organized and set-up a large men’s and women’s health practice in his home state of Montana. 

“[Dr Sorli] has direct clinical experience treating the type of patients we would be treating with Natesto, but he’s also very much been on the forefront of metabolic disease and diabetes, which is an area that we’re interested in looking at with respect to Natesto, and he’ll be actively driving the strategic development of the clinical profile of Natesto.”

Based out of Philadelphia, Mr Hickey brings fifteen years of direct commercial experience in the US and will be responsible for leading the Natesto business in the US as the company moves forward.

“From a management perspective, we’ve got people with direct experience in the U.S. marketplace, and relevant experience to our business, to our therapeutic area and to what we’re trying to achieve onboard at Acerus.”

The company’s board has also seen some recent additions, complimenting a number of long-standing members, including Chairman Ian Ihnatowycz, who has served as a Director since September 2013.

“[Ian] is our leading shareholder; he owns about 84% of the company, and he’s been a long-time board member. He’s a long-time investor and has been a core visionary for the company over that period of time.”

Other long-time board members include entrepreneur Stephen Gregory, and Borys Chabursky who is the founder and Chairman of Shift Health, a healthcare consultancy in Toronto, plugging him in to the start-up, Venture Capital and healthcare consulting spaces.

“We’ve added two new board members recently – a fellow by the name of Scott Leckie, who’s our Audit Committee Chair, he’s a CFA and has significant investment experience. He used to run a private investment company, so he brings that capital markets/investment side to the table.”

“We also recently added Geoff Cotton, a US-based commercial and medical affairs pharmaceutical expert. He is an MD by training, has worked in medical affairs, and he’s also launched products in the US and has run various US businesses, at one point for Gilead, that range up to about $8-9bn USD in sales.”

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Acerus’ patent strategy presents a unique opportunity for success for the company and potential investors

Block and tackle

With this mix of long-standing team members and new faces, Mr Gudaitis is confident that the team has the relevant experience and skills to make the business a success with Natesto, which he identifies as the company’s short-term goal.

“I usually describe our strategy in three phases – phase one is the here and now phase, and really the goal is to get Natesto moving and get it commercialized successfully in the US. That’s the core platform for the company, that’s the foundation for the business, and we will build the company around that success, and that’s really what we’re focused on right now.”

The second phase is to leverage the commercial infrastructure the company has built in the US by adding more products to its portfolio through business development opportunities that will complement and leverage the investment already made.

“The third phase of the growth strategy for us would be to circle back to our pipeline and bring in some additional products, whether they are something that we can build into the nasal gel technology, or even something that complements our focus on urology and endocrinology from an R&D perspective.”

The end goal is to have a growing and maturing business with Natesto that becomes the engine of the company, with a couple of complimentary assets added around the product in order to leverage the commercial infrastructure and investment, and then something in the pipeline to give the company continuity into the future.

“So that we have a late-stage mature product, we have a growth product, and we have some new products,” Mr Gudaitis says. “That would be the ultimate goal in what we’re trying to achieve in terms of the short, medium and long-term to build a sustainable, value-driving company for investors.”

Over his 25 years in the business, Mr Gudaitis believes he has learned some important lessons, many of which came during his time working at Gilead Sciences, a company that was run on the premise of being lean, hands-on and focused on outcomes.

“For a small company like Acerus, I look through that lens every day. We have undergone some significant reorganization and streamlining of the operations. The biggest lessons for me have been – focus on what you can control, keep the business lean, and keep focused on the result and the outcome. That’s one of my key takeaways from my Gilead experience.”

Another key lesson learned has been to embrace good old fashioned blocking and tackling, a strategy that the management and board are well set-up to execute in the case of Natesto to make the business a success.

“If you go in and do the basic executional elements well – build good key opinion leader support, make people aware of the product, have reimbursement in place, have the support systems for physicians and practices to get product to people when they need it, and have patients activated to ask for the product – you will be successful in this category.”

With a full product life cycle in front of it, Acerus’ patent strategy presents a unique opportunity for success for the company and potential investors. Find out more about Acerus Pharmaceuticals Corporation by visiting www.aceruspharma.com.

Who dares wins – America’s impending new political paradigm

Joe Biden - Matt Versi - The Boardroom Broadcasts

In 2008, Americans voted for change. A bright, charismatic young senator from Illinois ignited the imagination of the American voting public. Disillusioned with the political class, and opposed to the direction the country was headed, they lined up for hours to cast their vote, not just for America’s first black president, but for the man they believed could change the system and represent their interests rather than those of corporate donors and the billionaire-class. After eight years in office, and little change in Washington D.C., President Obama, by his own rhetoric as a yard stick, failed to change Washington, which by the end of his administration had already started to sink back into the, so called, swamp.

In fairness, as soon as Obama swore his oath, Republicans in Congress were already laying out their strategy to oppose, slow and, if possible, derail his agenda. That is, as they say, politics. The Republicans may have lost the election, but they still had a constituency to represent. That constituency made itself heard during the 2010 re-birth of the modern Tea Party which, yes, was comprised mostly of Republicans, but also disillusioned Obama voters who viewed his bailout of the banks and Wall Street, during the Global Financial Crisis, as a betrayal, leaving them – the middle and working class – to pick up the pieces. 

The Tea Party movement, while ironically commandeered by billionaires and Wall Street, planted the seed for the reactionary movement that was to come. While in its early iteration the movement propelled rising stars like Marco Rubio and Ted Cruz, it also captured the attention of property developer and reality TV star, Donald Trump. The messaging coming from the Tea Party echoed much of what Trump had been saying for the past thirty years. However, as time went on, and once elected, the Tea Party’s rising stars drank the swamp water and, before long, began singing from the establishment song sheet of tax cuts and smaller government as the core “solutions” to America’s problems. In 2012, the Republican establishment did what they usually do and ran an old-style economic liberal and social conservative candidate, Mitt Romney, who campaigned on the same tired and unimaginative policies of tax cuts and smaller government. In a choice between the establishment Romney and the incumbent president who was again offering hope that he could still change the system, voters clung to the latter and re-elected Obama.

Cut to 2015, the lead up to an open seat presidential election (so named because the incumbent president isn’t running) and the field is flooded with Republican candidates chasing the Party’s nomination. It was a mix of legacy establishment candidates like Jeb Bush and John Kasich, and the new generation GOP candidates Marco Rubio and Ted Cruz – again, all humming the same tune. On the Democrats’ side the Clinton machine had all but won the battle before it was fought – spending the preceding three years taking over the DNC and skewing the nomination process in Hillary Clinton’s favour. Only a handful of unknowns put up their hands to compete for the nomination, only to be brushed aside by Democrat voters as uninspiring, with one exception: former democratic socialist Senator Bernie Sanders. Despite his early momentum with young voters, the Clinton machine wrote off Sanders as an eccentric nobody – an almost fatal move.

Enter (or should I say ascend down a golden escalator) Donald Trump. In a choreographed for TV event, Trump announced he was running for president. But, gold and marble lobby surrounds aside, this was no ordinary announcement. Trump, speaking mostly off the cuff, used this highly televised speech to blast the establishment of both parties, blaming them for the state of decay he believed America had fallen into. The content of the speech was confronting, striking a tone eerily similar to the Netflix show House of Cards which had aired an episode earlier that year depicting fictional president Frank Underwood declaring to the nation, “The American Dream has failed you. Work hard? Play by the rules? You aren’t guaranteed success. Your children will not have a better life than you did.” In his announcement speech, Trump took it further: “Sadly, the American Dream is dead” he proclaimed. For many Americans, hearing those words said aloud by an actual presidential candidate echoed their own long held feelings about America in 2016. They had worked hard and played by the rules, but what did they have to show for it? Nothing, many concluded. If the hope they had placed in Obama changing the system hadn’t worked, Americans had now decided they were prepared light the fuse by sending in Trump to blow the system up.

One by one, the establishment GOP candidates fell to Trump as he crisscrossed the country in his private Boeing 757 jet, appropriately referred to by his supporters as ‘Trump Force One’. In the end only two serious contenders remained: the former Tea Party stars Marco Rubio and Ted Cruz, having only won three and 11 states, respectively. Both withdrew from the race and eventually endorsed Trump as the Republican nominee. The hostile takeover of the Republican Party by Trump had not only shaken up the GOP, it would completely re-orientate the American political paradigm, replacing the economic libertarianism of tax cuts and smaller government with a bold and audacious economic nationalism that made the interests of the American working and middle-classes paramount, and ushered in the new parlance of ‘fair trade’ over just free trade.

Clinton struggled to capture the excitement of the Democrats’ base in the way Bernie Sanders had managed to do. Nevertheless, the Clinton machine had clenched the Democrats’ Super Delegates (comprised of party apparatchiks and former political office holders) and turned their sites to Trump. Again, voters were being offered a choice between an economic neo-liberal establishment figure defending the record of the previous administration and the status quo, or an outsiders’ economic nationalist message of America First. FBI investigations and Wikileaks aside, Trump’s campaign resonated with those Americans who felt they had been left behind by the economic policies of previous administrations and so, as they did for Obama, millions of those forgotten Americans cast their vote for Trump.

In 2020, history is repeating itself. Trump, now the incumbent, has spent the past three years implementing his American First policies that had not only yielded, arguably, the strongest American peacetime economy in the nation’s history, with record unemployment numbers for almost all demographics, but also saw the reset of the global order, reorienting American foreign policy away from acting as the Free World’s Atlas, and towards a multinational effort of free nations – now rebuilt and highly advanced since the end of the Second World War – to share the burden militarily, if not then financially, of defending the Free World in the 21st century.

Former Vice President Joe Biden, now the Democrats’ nominee for president, finds himself curiously in a similar situation to Clinton in 2016. After a bruising early Democrat primary packed with prominent candidates, including the resurgent Sanders, Biden has come out the other end in an unenviable position of having to both defend the Obama administration’s liberal record and attempt to reconcile the more radical policies and causes being championed by an ascendant New Left, comprised of Sanders aligned democratic socialists. The only thing holding those two competing factions together seems to be their shared hatred of Trump. One may rightly anticipate that, if they were successful in defeating Trump, the two factions would descend into open conflict for control of the Democrat Party. It’s hard to see a President Biden being able to maintain party unity beyond the election.

An example of this tricky situation are the protests for police reform, which began following the killing of George Floyd by Minneapolis police. The protests briefly began as peaceful, but were quickly highjacked by anarchists and militant communist agitators calling themselves ‘ANTIFA’ – a name previously used by German communist groups in the 1930s. ANTIFA and its supporters have used the cover of the protests to attack police, bystanders and anyone they determine to be opposed to their political ideology. They’ve been widely supported by New Left Democrats who have joined their calls to defund the police.

In the beginning, Biden and his new running mate, Kamala Harris, both backed the protests, with Harris declaring that the agitators “are not going to stop. Everyone beware, because they’re not going to stop before Election Day in November, and they’re not going to stop after Election Day”. As the protests continued to grow increasingly violent the Trump campaign capitalised on Biden’s hesitation to condemn the rioting, by pivoting their campaign narrative to one of law and order. Biden has since been forced to publicly condemn the rioters and agitators. However, Biden’s team know he is walking a thin line trying to draw a distinction between supporting the peaceful protestors and the brave police officers who are trying maintain the peace, and the radical rioters, supported by the New Left, and the police officers and policing practices that led to Floyd’s death. When discussing the protests and the police, Biden may ironically need to make his case by pointing out that there are “some very fine people on both sides”.

Biden’s work to maintain a unified party and present an acceptable vision for America to voters has been made even more difficult thanks to Congressional Democrats’ insistence on using parliamentary tactics to attack, delegitimise and ultimately remove Trump from office through impeachment. Since Trump’s election, Democrats have transformed themselves from a party of government – having maintained their majority in the House of Representatives for much of the post-Second World War period – and into something that harkens back to the short-lived Anti-Jacksonian Party of the 1820s, whose primary organizing principles was defeating President Andrew Jackson.

Distracted with conspiracy theories and dodgy dossiers, Democrats have failed to regroup and reassess what went wrong in their 2016 campaign, and why Americans in a majority of states, including traditionally ‘blue states’ turned their backs on them. Parliamentary tactics and personal smears aren’t going to be enough to win an election. Americans aren’t schmucks, they know, as Obama put it in 2008 that “when you don’t have a record to run on, you paint your opponent as someone people should run from”. In order to bring back those disillusioned voters that put both Obama and Trump into the White House, Biden and Harris will need to clearly articulate a new vision that will propel the country forward, and not backwards to the old status quo.

One Trump policy a Biden administration would be expected to continue is America’s new hawkish China policy. It may have taken Trump to finally act on China, but establishment Democrats in Congress are now well aware of the challenges the Chinese Communist Party (CCP) poses to the world order and to America’s interests. They will push Biden to continue to counter the CCP’s global debt-trap diplomacy through its Belt and Road Initiative – more aptly named Bait and Switch Initiative. However, Biden will need to avoid the pit fall of readopting the post-Cold War defense arrangements America’s allies had come to exploit. A war fatigued American public will not accept America returning to the role of the world’s sole police man (at least not for the foreseeable future). Trump’s policy of America leading a multinational collaboration of free nations all contributing militarily and financially to the defense of the Free World is the key to being able to sustain a long geopolitical struggle with China.

At the time of writing, there is less than 60 days to go until Election Day, and the polls look to be extremely close. Again, an eerily similar situation to 2016. Trump is still seen by voters as the best candidate to manage America’s economic recovery from the CCP’s Coronavirus, and his campaign’s law and order messaging is resonating in key battleground states where videos of burning cities are still flooding their newsfeeds.

The debates (assuming there will be more than one), will be the deciding factor of the election, October surprises or not. Unless an extremely rehearsed Biden can show up to the debates, stick to his lines and not lose his train of thought, Trump will depict him as not only unable to control the radical elements now infiltrating the Democrat Party, but also show Biden is in cognitive decline and that, if elected, Americans can’t trust that it will be Biden actually running the country.

Regardless of who wins, one thing is certain: the very notion of what it means to be a Republican or a Democrat will be reshaped, ushering in a long lasting new political paradigm for America in the 21st century, with the ripple effects felt all over the world.

Matt Versi is a public policy advocate and strategic communications specialist, advising multi-national companies and government leaders, including serving on the staff of the Hon Scott Morrison MP, Prime Minister of Australia. Find out more my visiting MattVersi.com.

BMEX Gold (TSX-V:BMEX): Entering a hot market

Feature - BMEX Gold David Sidoo - Boardroom Broadcasts

Junior Canadian gold exploration company BMEX Gold has the primary objective of acquiring, exploring, and developing viable high-grade gold projects in the mining-friendly jurisdiction of Quebec.

Founded in 2017 and listed on TSX Venture Exchange, the US Exchange (MRIRF.Q), and the German Exchange (8M0), BMEX Gold is a small-cap company with a market cap with just over $12m. Founding shareholder David Sidoo brings more than 31 years of experience in the venture capital space. He was one of the founding shareholders of American Oil & Gas, which was sold to Hess Corporation in 2010 in an all-stock transaction valued at over $630 million dollars. He was also CEO and President of Advantage Lithium, building the company from a mere 477,000-ton resource to 4.8 million tons in two short years. Mr. Sidoo discusses his varied and successful career to date, the impressive sale of Advantage Lithium to producer Orocobre, and the Quebec assets that were recently acquired by BMEX gold. 

Varied career

“I grew up in New Westminster, British Columbia,” Mr. Sidoo explains. “I went to the University of British Columbia and played football there for the UBC Thunderbirds, won a national championship in 1982, and then graduated with an education degree.”

Mr. Sidoo spent the next five and a half years playing in the Canadian Football League for the Saskatchewan Roughriders and the BC Lions. At the time of his trade to the Lions, he was also working as a broker, and spent half a season juggling the two professions.

“I started building up my clientele base, looking at resource projects and tech deals. I know the real turning point in my career came when I moved to Yorkton Securities.

Mr. Sidoo’s career took off from there, and he spent six and a half years at Yorkton, becoming involved in a number of successful projects in the resource sector, working closely with many successful entrepreneurs in the mining sector.

“In 2000, our chairman of Yorkton Securities, Frank Giustra, decided to retire. He had a real passion for the film industry, so he decided to form Lionsgate Entertainment, which is now one of the largest and most successful film companies in the industry. When Frank left, Yorkton just wasn’t the same. I stayed there for about another year, then left Yorkton and put an investment banking company together on my own.”

At that time the oil and gas sector was very hot and Mr. Sidoo capitalized on some of the entrepreneurial contacts he had made over the last six and a half years in Denver, Colorado, convincing Pat O’Brian and his group to work with him on an oil and gas deal.

“They were basically building value for everybody else, and just getting a fee for doing that. So I convinced them to put some of their own acreage together that had a chance for some success. I was responsible for raising all the capital and help put the board of directors together and said let’s try and bring some value for you and our shareholders.”

It took about a year for this group to decide to work with Mr. Sidoo, having heard things about Vancouver which made them a little nervous to get involved. Ultimately, they went ahead and began working together forming a company called American Oil & Gas Inc.

“We had a few hits and misses,” Mr. Sidoo says. “Then the management team decided to acquire small acreage in North and South Dakota in a formation called the Bakken. Many majors were drilling in the area and were having some success. Subsequently management decided to get more aggressive and acquire more acreage. Each well they drilled on that acreage was successful and economic.”

“Every hole they were drilling was successful, so there was a point in time where either the company had to continue raising the money and keep drilling holes, or we look to sell the company. So management hired Tudor, Pickering in 2010 and eventually sold the company for just over US$630m to Hess Corporation.”

“I took many of the lessons I learned from sports and working with successful people at Yorkton when I built companies.” American Oil & Gas was the largest deal Mr. Sidoo was involved in that moved his career to a different level. 

Orocobre sale

Mr. Sidoo’s next project was Advantage Lithium, of which he was founding shareholder, President and CEO. The company was eventually sold to lithium producer Orocobre in March of 2020 for over $100m.

In 2017, there was a big spike in the electric-vehicle (EV) market, with Tesla paving the way for a new era. There was plenty of international noise suggesting that EVs were going to become the new normal and most analysts agreed that the demand for electric vehicles was going to rise over the next ten years. 

 “Electric-vehicles are powered by a battery, batteries are fueled by lithium,” Mr Sidoo explains. “There were several startup companies that started going public on the TSX, as demand for lithium began to grow.”

Mr. Sidoo began to approach a few companies in Argentina looking for quality assets. He determined that Argentina was one of the better jurisdictions for Lithium exploration and development. One of these companies was Orocobre, which was being courted by many other companies about an asset called Cauchari – the company’s focus was building a facility and producing lithium in Olaroz so they had done very little work on Cauchari and were looking for a partner.

“Their partners didn’t want them to de-focus themselves from their production, so they left the exploration side alone. I convinced them, with my background and our network and the team that I was going to put together, that they should partner with me. So we formed a joint venture partnership with Orocobre where we owned 75% and they owned 25%.”

The first $5m from this venture went into exploration, and we eventually raised over $40 million dollars over two years. Advantage Lithium management took a small resource of 400,000 tons and increased it to just under 4.9m tons of LCE. In late 2018 the lithium market then began to top, and it became more difficult for small-cap companies to raise money.

“We decided we better monetize the asset,” Mr. Sidoo says, “and we sold it to our partner Orocobre for just over $100m in an all-stock transaction. As a group we are very proud of the fact that we’ve had two significant buyouts in our career.”

Having worked from the ground floor developing multiple companies and taking them all the way through to sale, Mr. Sidoo still credits his early days playing sports for giving him the drive to succeed.

“I modelled success of creating these companies on three pillars – acquire good assets in a hot sector; secondly, you’ve got to have good people (good teammates; people who understand the area, have built companies before), and the third thing is, you’ve got to be able to have the capital to build these assets.”

BMEX Gold

Mr Sidoo believes he has shown over the last fifteen years that he can create strong shareholder value. He has now turned his attention to BMEX Gold, utilizing many of his old contacts to help make it a success.

“It’s a very hot gold market,” Mr Sidoo says. “I’ve probably been looking for a year now for quality assets. I could have settled for some marginal assets, but we decided we wanted to make sure we could have an asset that had a resource on it, and another asset that had a lot of upside potential in a good area. We were able to find some very good assets in Quebec.”

Canada has proved to be an easy area to do business in, with an amicable government open to gold exploration. Mr Sidoo has enlisted Dylan Sidoo, who was a part of the team at Advantage Lithium, to help with business development. Another colleague from the board, Peter Espig, has also moved over to BMEX Gold as well as Dr. Mark Bustin. 

“One of our key additions to BMEX gold is VP of Exploration, Martin Demers. Martin was the key geologist who developed Hecla Mining company that was taken over by Aurizon Mines Ltd. for US $796m.”

The company has also been successful in raising enough capital to get started, recently doing a seed round of $900k, and is preparing to start a $6-9m raise, which the company is completing through a combination of charity flow-through and private placement.

“We’ve brought along some of the same teammates in putting this company together,” Mr Sidoo says. “We’re pretty excited about BMEX coming out of the gate – the company has two strong assets, a very experienced team and is funded well.”

BMEX has acquired two assets in Quebec – the first is called King Tut, in the prolific mining area of the Abitibi region, and the second called Dunlop Bay. 

“AMEX Exploration is a publicly listed company on the TSV who’s main property is 60km from King Tut. AMEX has gone from 8 cents to a high of $3.50 on some very good drill results.”

BMEX’s King Tut asset appears to be on the same fault line as AMEX. BMEX will begin an aggressive drill program in October of 2020 on King Tut.

“King Tut has 122 contiguous mineral claims that cover over 5200 hectares. The company’s second asset is Dunlop Bay. Dunlop Bay has 76 contiguous mineral claims that cover over 4200 hectares. Like King Tut, Dunlop Bay is strategically located around producer Glencore, a major gold producer. 

“In October and November of this year management is going to drill a 2,000m drill program at Dunlop Bay and 3,000m drill program at King Tut.”

BMEX Gold has two very good assets and an experienced management team, an aggressive drill program in 2020, and is well funded. If investors are bullish on gold then companies like BMEX gold are ones they should follow. 

“You would think that when the company begins drilling in October, they’re going to have good results to announce in November and December. It’s exploration – you never know what Mother Nature’s going to give you – but we’ve ticked off a lot of the boxes trying to reduce the risk.”

With both King Tut and Dunlop Bay, BMEX’s ultimate goal is to validate very good historical drill results from the past to build a significant resource on each asset.  

“When investors are looking at investing in a company,” Mr. Sidoo concludes, “they should look at the sector. If your bullish on gold, you think the upside is there, that’s where you should consider investing some of your money. What I want to say to investors is when you are looking into investing to a small-cap gold company – look at the management team involved, review the assets closely, and determine if the company is well capitalized.”

Entering a hot market with the right team and the right assets is likely going to ensure a lot of future success for BMEX Gold and Mr. Sidoo, who has already proved himself perfectly capable of creating strong value for shareholders. Find out more about BMEX Gold (TSXV:BMEX) by visiting bmexgold.com.

Baselode Energy Corp (TSX-V:FIND): Opportunities in uranium

Featured image Baselode - James Sykes, CEO-Boardroom Broadcasts

A new company in the high-grade uranium exploration industry, Baselode Energy Corp. has unique properties and uses innovative ideas for exploring the prolific high-grade Athabasca Basin uranium district.  

Founded in 2020 and listed on the TSX Venture Exchange (TSX-V:FIND), Baselode Energy is a micro-cap with a market cap of $14 million as of July 20th 2020. CEO James Sykes brings over fifteen years of Athabasca Basin uranium exploration experience to the team, most notably leading the discovery for NextGen’s Arrow deposit and providing invaluable work on Hathor’s Roughrider deposits. He has been directly and indirectly involved with the discovery of over 550m lbs of U3O8 in the Athabasca basin. Here Mr Sykes discusses the successful management team that has provided significant investor returns in the past in other ventures, the unique and innovative exploration methods designed to help the discovery of basement-hosted deposits go into development quickly and easily, and why now is the perfect time for investors to enter the uranium space.

A unique situation

“With uranium markets, it’s been in the downturn for quite a while now,” Mr Sykes explains. “It’s always been a question of when the prices come back up, not if the prices come back up. We’ve got so many utilities out there that use uranium as fuel, so nuclear energy, and the demand has actually grown over the past 10-20 years.”

There has been good periods for uranium in the past, most notably between 2005 and 2007, when the spot price peaked at over $100 per lb., and a lot of investors made substantial returns. This happened because there were certain fundamentals that initiated the price run. 

“Looking at today, 14 years later, those fundamentals exist now, however the whole situation is much more improved. We’ve got more demand, but we’ve got far less supply. Who’s producing nowadays? The two largest uranium producers in the world have curtailed their operations. You don’t see that in any other commodity.”

This unique situation means that the time is right for investors to step in and make a significant return from the impending rise in uranium price. The spot price jumped from $24 to $34 in March 2020, making it a perfect time for investors to enter the market.

“Baselode energy was the brainchild of Stephen Stewart,” Mr Sykes says. “He’s the CEO behind Orefinders and some other ventures, and he’s always wanted to get into the uranium market, because again he sees the same fundamentals – it’s really not a question of if the prices come back up, it’s when.”

Earlier this year, Mr Stewart identified that conditions were playing out in precisely the way the industry had expected, and decided to begin Baselode Energy and start taking advantage of the fundamentals. He contacted Mr Sykes after viewing his resume and together they started the company.

The company currently has two projects it’s working on, exploring two sites outside the Athabasca Basin. One is the Shadow property and the other is the Hook property. Baselode is determined to make a discovery at one of these sites prior to the spot price really taking off.

“We are approaching our exploration quite differently from what most of our peers are doing. We call our strategy the Athabasca 2.0. It’s different from everybody else, because we’re exploring for mineralization in the basement rocks.”

Mr Sykes has conducted years of study on the subject, looking at the work of others, and has identified that most of the mineralization that’s been discovered in the Athabasca area has come from basement rocks.

“There’s a term that was coined back in the 60s and 70s about ‘unconformity-related uranium deposits’,” Mr Sykes says, “and that has actually driven people to explore for those type of deposits with horse blinders on, so not taking into account what the real picture is, what the real model is.”

Baselode has established a new model to work from going forward, exploring for high-grade uranium in the basement rocks of the Athabasca Basin area. It’s an impressive strategy that looks for deep structures and plumbing systems, with unique properties and plenty of potential.

The key idea behind this strategy is that a basement-hosted deposit (outside of the Athabasca sandstone) will go into development much quicker and easier than a typical Athabasca sandstone deposit.

Experienced management team

“One of the other things that we have going for us is that we’re new. We just listed on June 10th of this year, so we don’t have a lot of shares outstanding. We’ve got a pretty small float, [and] our share price has actually been doing rather well since we started.”

The company provides a ground roots scenario for somebody coming in to be able to ride a discovery. Any investor knows that a discovery is where the real money is made, which is then enhanced by development. The company is primarily interested in making discoveries, and will then decide if it wants to continue into developments.

“Our Board and Management are mostly from the Orefinders group – Charles Beaudry, Stephen Stewart, Gautam Narayanan – and our CFO is from Rider Investment. So we’ve got a pretty unique Board, guys who’ve been in the industry for quite a while now, guys with a financial backing.”

Baselode-James Sykes-Boardroom Broadcasts
Baselode Energy is helping provide more uranium to the world for the growing global nuclear energy demand

Mr Sykes makes up the technical side of the company together with Mr Beaudry, who has over 35 years’ of exploration experience in multiple commodities, and knows uranium well, having been in the Athabasca Basin before.

“I’ve done 14-15 years in the Athabasca Basin as well, so I kind of call that my backyard. I think we’ve got a very strong team who know how to take the company forward and maximize our shareholder return. That’s our game plan going forward.”

The experienced management team at the helm have provided significant returns for investors in the past in other ventures, and its strength is that every member of the team knows their role and does it extremely well.

“A lot of my focus will be on getting the story out there,” Mr Sykes says, “[as well] as the technical side of things, building this whole shell and pushing the envelope. Honestly I think this is a fantastic team and I’ve seen what Stephen and Orefinders have done, and I’m very happy to be working with these guys.”

The future is nuclear

With governments around the world committed to reducing greenhouse gases (GHG) and having zero-carbon emissions, nuclear is the best energy source for meeting the demand at peak hours. Once small modular reactors come on-line, they will positively impact the nuclear energy market.

The next steps for Baselode is to kickstart exploration efforts on both the Shadow and Hook properties, with Shadow in particular being a unique property in that it has never been staked before.

“We don’t want to follow on everyone’s coattails, we want to set the new trend. So we’re doing that. Shadow needs a complete set of new work on it. It’s never been explored – there’s no-one been on the ground, there’s been no air coverage, so our first step is to get some airborne geophysical coverage, learning what’s underneath the rocks.”

A survey from the air will allow the company to identify deep structures and make some deep geological interpretations, which will help it identify targets near the surface that look more promising.

“After we get that information back, we’ll put it altogether, we’ll see what we’re seeing and then hopefully be able to get boots on the ground to assess the rocks that we can actually see on the ground and match that up to the geophysics so we can refine our model even further. Then by that point we’ll be able to assess if we need to do some ground follow-up geophysics, or if we can simply be drilling by the end of this year, early next year.”

The Hook property, which is adjacent to the Athabasca Basin, has received some exploration in the past, so there are historic assessment reports going back to the 1960s, which are being compiled in order to build a model for the property.

“[We’re] trying to refine what has been done. Do we like what we see of what has been done and how do we go from there? Do we need another property-wide geophysics coverage? Do we need ground surveys? Are we going to be drill-ready by the time we get this assessment work done? So that’s where we are.”

In addition, the company is actively seeking out other uranium properties, extending its search not just to the Athabasca Basin region, but anywhere else in the world that it may be able to find suitable areas.

“We want to get everything rolling before the uranium spot price really takes off,” Mr Sykes says, “and hopefully have a discovery made before then. And we’re keeping our eyes and ears wide open and just looking to see what other opportunities are out there for us.”

With all eyes on the climate crisis and finding the safest renewable energies, the team at Baselode is fully focused on nuclear energy, which Mr Sykes believes to be the best option long term for cutting pollution and bringing back clean air.

“We believe in nuclear energy; we believe it’s a way forward for our whole civilization to move. You want to see blue skies? Go nuclear energy, there’s no doubt about it. It’s the cleanest, most reliable energy source we have available to us.”

With its innovative exploration methods for discovering basement-hosted deposits in the Athabasca Basin area, Baselode Energy is helping provide more uranium to the world for the growing global nuclear energy demand. Find out more about Baselode Energy Corp. (TSX-V:FIND) by visiting www.baselode.com or contacting Mr James Sykes directly at jsykes@uraniumgeologist.com.

Statistics showing how the WordPress platform is a global leader for websites

wordpress-Top 10 SEO founder Senka Pupacic -boardroom-broadcasts

Since the launch of its original version in 2003, WordPress has evolved considerably into the worldwide phenomenon it is now. The platform and its community are ever-expanding and show no signs of losing traction.

While many other Content Management Systems (CMS) are available, WordPress has grown to become the world’s most widely used CMS – powering a phenomenal 37.6% of websites on the World Wide Web. Its popularity and ease of use have helped it to become the market’s most dominant CMS, taking a large proportion of the market share when compared with other Content Management Systems.

It can be difficult to imagine the level of impact WordPress has had on how we use the internet, so to put the scope into perspective, here are some incredible statistics on the world’s most popular CMS:

Other than powering well over a third of the entire internet’s websites:

  • WordPress has an impressive 60.8% share in the Content Management Systems market
  •  14.7% of the top websites in the world are powered by WordPress
  • Over 500 new websites are built daily using WordPress whereas around only 70 a day are built on competing platforms such as Squarespace or Wix 
  • Over 55,000 plugins are available on the WordPress Plugin Directory
  • 22% of the world’s leading 1 million eCommerce websites are powered by WooCommerce – WordPress’ eCommerce platform

Developers Mike Little and Matt Mullenweg created WordPress out of necessity, as the developers of the blogging software they were originally using, b2/cafelog, had discontinued the service.

Although WordPress was based on b2/cafelog initially, it quickly became apparent to Little and Mullenweg that there was a growing need for a more elegant and user-friendly weblog publishing system. Since its original creation, Little, Mullenweg, and countless other open source developers have contributed to the constant development of WordPress, making it a unique publishing system compared with b2/cafelog. 

WordPress is developed using MySQL, an open-source relational database management system, and PHP, a general-purpose scripting language. As WordPress is licenced under the GNU General Public License (GPL Lv.2+), meaning it can be used for free and modified by anyone. Due to this developmental freedom, it is estimated that collaborative 151-people years have gone into building the platform as it currently stands, at an approximated cost of over AUD$11.3 million 1.

As it is now clear the sheer impact WordPress has had on the World Wide Web, it is now worth expanding on some of these incredible statistics.

WordPress powers around 37.6% of the internet

Although this number might not seem significant initially, a recent Netcraft survey2 estimates there are over 1.3 billion active websites published on the internet, meaning that about 455,000,000 websites are published using WordPress, or roughly 20% of all self-hosted sites3.

There have been over 56 million downloads of WordPress 5.4

While this figure may seem impressive, it is only for the latest version of WordPress. This vast number is always growing, and live statistics can be viewed using a download counter available on WordPress.org4. It is important to remember that these figures are the number of downloads, rather than the number of active sites hosted by WordPress and does not count the 36 older versions of WordPress.

Word press 5.4-Senka-Pupacic-Boardroom-Broadcasts

WordPress hosts 14.7% of the leading websites in the world

A large number of the world’s most successful companies use WordPress as their Content Management System of choices, such as CNN, NBC, TED, People Magazine, TechCrunch, the NFL, CBS Radio, Best Buy, and UPS, to name but a few of the Fortune 500 Companies5 that use WordPress to power their websites.

The WordPress plugin directory hosts over 55,000 plugins

Plugins allow users to customise their websites to suit their needs, and with many free and paid plugins available, users are empowered to personalise their sites within their budgets. To date, there are over 55,000 plugins available, and many more are being added to the directory daily. There have been an estimated 1 billion collective downloads of WordPress plugins, with this number also increasing daily.

WordPress is the world’s most rapidly growing Content Management System

Google Trends data comparing keyword search terms for popular Content Management Systems from 2004-present shows a clear indication of keywords relating to WordPress achieved a higher ranking6 than competing CMSs such as Sharepoint, Blogger, and Drupal. This trend suggests that if you want organic traffic drawn to your website, you should publish content based around WordPress.

WooCommerce powers more than 30% of all ecommerce stores 

WooCommerce, the popular WordPress eCommerce platform, powers over 1.5 million online stores – and 22% of the top 1 million eCommerce websites7.

Since its creation 17 years ago back in 2003, WordPress has evolved from a simple and straightforward blogging platform to the Content Management System of choice for over one-third of the internet – including many top-notch Fortune 500 companies. While its ease of use has no doubt contributed to its success, the countless personalisation features available to its users – allowing them to start anything from simple blogs to full-blown websites – is what makes WordPress the most popular and successful CMS in the world. Due to the collaborative nature of this powerful platform, it will always continue to evolve to meet the ever-growing demands of the plethora of internet users, from the small-scale blogger to multinational organisations.

Senka Pupacic is the founder of Top 10 SEO, www.top10insydney.com.au.

1 openhub.net – WordPress estimated cost 

2 – news netcraft.com – Web Server Survey 

3whoishostingthis.com – compare WordPress 

4 – WordPress Download Counter

5Fortune 500 Companies 

6WordPress related keywords rank higher 

7WooCommerce

8 – Woocommerce has a 27% share – According to Builtwith trends

9Gutenberg Release

Hong Kong citizens seek a new homeland

Feature_ Charting a course through political and economic headwinds, Nick Campbell - Boardroom-Broadcasts

As China moves to reintegrate Hong Kong, can Australia and Canada continue to be the destination of choice for business seeking an alternative?

Ever since Hong Kong was ceded by the Qing Dynasty in 1842 and established as a British colony in 1843, it has acted as the gateway to mainland China. 

For almost 100 years it remained a safe and stable hub for West-Oriental commerce, ceasing only during the Japanese Invasion in World War II. 

At the beginning of the 1960s, Hong Kong was China’s second-largest trading partner and leading export market. By 1986, they received 31.6 per cent of all Chinese exports. Some speculated the handover in 1997 would spell the end for this lucrative hub of trade and business, but Hong Kong refused to slow. 

Foreign investment into Hong Kong in 1998 was worth a little over HKD$1.9 trillion (AUD$342.5 billion), and in the following 20 years to 2018, this had risen to over HKD$16 trillion (AUD$2.9 trillion). 

However, according to the 2020 World Investment Report released by the United Nations Conference on Trade and Development (UNCTAD), Hong Kong’s 2019 foreign direct investment was 34.4 per cent, down on 2018. The report attributed this to continuing social unrest and a decline in corporate earnings. 

As social and political uncertainty continues, the people of Hong Kong are looking for a new home to invest their capital. 

Sydney has long been an alternative for those seeking opportunity outside of Hong Kong. This is due to its position as a global trading centre into the United States, Europe and the Asia-Pacific region.

Australia’s relative economic and political stability continues to draw foreign businesses that seek the certainty to implement long-term strategies. It is also uniquely placed geographically, with the advantage of being able to communicate and trade with Asia within similar time-zones – giving businesses a competitive edge over other global trading centres.

Yet, it is not just Sydney that has positioned itself as a hub for Hong Kong emigration. 

Canada’s Vancouver has long been a destination for Hong Kong’s ex-pats. And, like Australia, Canada offers a stable, democratic, and openly multicultural society. 

The bulk of recent immigration from Hong Kong to Vancouver started in the early 1990s after political instability in mainland China. Interestingly, one of the main attractors to Vancouver was the quality of education on offer. 

Who’s on the move?

There are three clear groups of Hong Kong residents emigrating: Youth (including students and those just beginning their careers), mid-tier executives (including those in affiliate branches of global companies) and established business leaders (often from well-established families and businesses a long history in Hong Kong) 

The first two of these groups are often seeking new and prosperous futures. 

Hong Kong’s students and young professionals are some of the most distinguished in the region with the Times Higher Education ranking putting Hong Kong Polytechnic University in the top 100 in 2020 rising 15 places since 2019. 

Hong Kong’s current education system provides a broad international and pro-market approach to learning, with students often capable of speaking English fluently (together with other regional languages and dialects), offering western businesses a bridge into China and wider Asia with an exceptional work ethic.  

Young people from Hong Kong are also seeking to move to more democratic nations. This has significantly increased after more than a year of pro-democracy protests in Hong Kong over the recent Beijing moves and the imposition of new security laws in June 2020. 

There is also a growing trend of mid-tier executives moving out of Hong Kong in search of overseas opportunities with their existing employers. 

While Hong Kong has been steadily growing – except for the last twelve months – there are limited opportunities for future personal career growth from junior to mid-tier executive positions. 

For those within large consultancies, firms and multinationals, current growth opportunities are trending toward western cities and markets such as Sydney, Vancouver and to a lesser extent, Singapore. 

Executives looking to move forward in Hong Kong are often unable to find higher roles or the competition for a tiny handful of domestic jobs is so high that relocating can be a more viable option. 

It should be noted that Hong Kong is not just a gateway city or a landing pad for multinationals wishing to do business in China. It also has large homegrown non-state-owned companies. 

Established families and businesses from Hong Kong have invested in industries ranging from hotels and hospitality to infrastructure, shipping and logistics. Over the years, many of these families and businesses have diversified their investments to be less reliant on both Hong Kong and China. 

These families and businesses have long been sceptical of mainland China, often owning homes in cities in other countries, with multiple passports and financial structures to ensure the safety of their investments. 

These families are looking to overseas cities to ensure their generational wealth can remain in the hands of their families, and their businesses can operate freely. 

These individuals, who unlike the youth and mid-tier executives, are primarily responding to push factors such as unstable political events and China’s recent move to tax Hong Kong citizens’ global income. Hong Kong’s new tax regime takes the potential tax rate of these families to 45 per cent, from about 15 per cent previously. 

While Sydney and Vancouver have long been two of the preferred destinations for people from Hong Kong, they are challenged when it comes to business migration competition by Singapore. 

Like Hong Kong, Singapore has long been considered a hub within Asia, with many multinationals housing their Asia-Pacific regional headquarters out of the city-state. Singapore has long-standing political and social stability while also offering an attractive taxation ecosystem. 

One of the more significant barriers to mass migration towards Singapore is its stance on critical rights and freedom issues. 

Singapore is known for curtailing people’s freedoms. In 2020 they ranked 158th out of 180 in the Worldwide Press Freedom Index, slipping eight places in 2 years. 

Singapore has also legislated for indefinite detention without charge. While the original intent of this legislation was for terror-related matters, it has been used against political opposition and enforces strict mandatory national service requirements that apply even to permanent residents. 

Taking advantage of the change

The changes to Hong Kong will create opportunities for both governments and businesses.

Governments are already beginning to take advantage of migration from Hong Kong. Britain has moved to create a pathway to citizenship for Hong Kong citizens who were born before Britain handed the territory back to China in 1997. 

Australia has also provided a pathway to permanent residency for more than 12,000 people from Hong Kong. Canada and Australia have suspended extradition treaties and are rumoured to be moving to offer further incentives to attract business from Hong Kong. 

Liberal Senator Andrew Bragg has been calling on the Federal Government to provide additional incentives for businesses, particularly in the financial services sector, to relocate to Australia, with the financial services sector currently employing over 260,000 people in Hong Kong. He has called for reforms to capitalise on Hong Kong’s ‘collapse as a credible financial centre in the region’. These reforms include lowering Australia’s company tax rate towards the 21 per cent Asia average and fast-tracking licence approvals. 

Businesses are also taking advantage of Hong Kong’s reintegration into greater China. Be it through expanding into the void left by businesses that are moving, taking advantage of businesses that are distracted or taking advantage of the stability that is provided to them locally. 

As Hong Kong-based businesses begin to move offshore to mitigate risk, there is also scope for businesses in Australia and Canada to step into the void.

Australian and Canadian businesses are also able to take advantage of Hong Kong businesses who are distracted by their local instability or political instability. 

Businesses in stable environments can utilise this to implement longer-term strategies, plan for change with certainty and access financing at often decreased interest rates. If Australian and Canadian businesses can harness this, they will be able to grow and develop with certainty. 

Those businesses that already have ties into Hong Kong will be well-placed to take advantage of Hong Kong’s reintegration into China. Companies that are engaged but not reliant on Hong Kong will be able to continue to reap the rewards of this gateway into the growth opportunities in China.

As Hong Kong continues a transition from a British colony to a wholly-owned territory of the Chinese government, it is sometimes oversimplified with suggestions of citizens  and businesses fleeing to democratic and free market alternatives.

In reality, it is a more nuanced shift, impacted more by the pull factors of career advancement, stable political environments, and financial safe harbours rather than push factors from an increasingly assertive administration looking to control and exert its influence in Hong Kong.

Nevertheless, this is an opportunity for Australia.  It can use careful domestic policy settings, to attract both business and talent from Hong Kong and welcome them to a new home – Australia. 

Nick Campbell is the Chair of the Nexus APAC Group. He has worked across Asia in both the private sector and government on Strategy and Public Affairs. Find out more by visiting www.nexusapac.com.au

Voyager Digital Ltd (FSE:USD2 | CSE:VYGR | OTC:VYGVF): Bringing crypto to the masses

1. Featured Image Voyager - Stephen Ehrlich, CEO-Boardroom-Broadcasts

A public, licensed crypto-asset broker that provides investors with a turnkey solution to trade crypto assets, Voyager Digital’s goal is to bring a better, more transparent and cost-efficient alternative for trading crypto-assets to the marketplace.

Founded in 2018 and listed on the Canadian Securities Exchange (CSE:VYGR), the OTC Markets (OTC:VYGVF) and the Frankfurt Exchange (FSE:USD2), Voyager Digital is a small-cap with a market cap of $100 million. Voyager offers investors best execution, data and custody services through its institutional-grade platform, making it the ultimate, all-in-one destination for investing and trading digital assets on mobile, and well-positioned to continue its growth and reach profitability by early 2021. Co-founder and CEO Steve Ehrlich discusses Voyager’s impressive revenue growth in the last 12 months, its plans for product and geographic expansion, and the reasons why he and Voyager are bullish about the future of crypto-currency and alternative banking. 

Simplifying crypto

“The crypto-currency market is an extremely fragmented market today,” Mr Ehrlich explains, “with over two hundred global exchanges in the marketplace, where people can trade from around the globe on these different exchanges.”

The market is also fragmented in terms of custody, how people hold their digital assets, so it can be very confusing for the average retail investor to participate in one of the fastest-growing assets in the markets. Voyager’s job is to help customers navigate these complex markets and understand alternative banking.

“I got together with my co-founders, there was four of us – Phillip Eytan, who’s a serial entrepreneur, who started billion dollar companies like Socure and Pager; Gaspard de Dreuzy, who’s been in the capital markets; and then most notably outside of myself is Oscar Salazar, who was the founding CTO of Uber.”

The co-founders bounded together two and a half years ago to take a look at the competitive landscape of the crypto-currency market, bringing together the breadth of their knowledge to try and bring a more consumer-friendly product to market. 

“[We wanted a product] that really simplifies the markets but gives the consumer enough information that they can make a really good decision on which crypto-assets they want to hold, earn and invest in and trade over the near future. That’s how we came together, and we started building the product off of a few meetings.”

One of the biggest problems in trading crypto-currency at the moment is the fact that there are multiple exchanges. This means consumers don’t know where they should open up an account in order to start trading on an exchange.

“There is very little price transparency in the crypto market,” Mr Ehrlich says. “So one exchange can have a price of Bitcoin, and another can have a different price. You have no idea where to go. That’s one of the confusing parts, and it keeps the retail investor from really participating in that market because of the fragmentation.”

Another issue is that most investors don’t understand how custody works. There is a lot of talk about different types of self-custody – owning your keys and your coin – which doesn’t make sense to a retail consumer.

“So we have to simplify it and make it easy for people to understand security, custody and trading of these markets, which is what the Voyager platform does and brings to the US market today.”

Other market players tend to work in two ways: one initiates lots of exchanges on one side of the world, creating a complex trading platform, either on a desktop or mobile; the other tends to be full of apps that oversimplify the market, making it so that consumers can only purchase Bitcoin.

“We play down the middle. We want all the retail consumers to use our platform. I’m ex E*TRADE, I was there in the days when E*TRADE first grew up and started bringing online brokerage to the masses; we want to bring crypto to the masses.”

3. Editorial image - Voyager Digital
Voyager Digital is simplifying the crypto-currency process, making it more accessible to consumers

Voyager has four distinct differentiators from competitors. One is the offer of 42 coins for people to trade, more than is offered in the other two models. Secondly, not only can consumers trade but they can also earn interest without locking up the coins.

“[Thirdly] we allow people to transfer coins in from other places to fund their account, and then four is the ease of use of the app, where you can actually download the app and then fund and trade all within two minutes or less, abiding by all regulatory requirements and making it really simple for people to open, trade and buy their crypto-currency.”

Seasoned veterans

As far as Mr Ehrlich is concerned, the company is still in the early stages of its journey. The adoption of crypto-currency is in its infancy, and so there is plenty to come in terms of realizing potential.

“First and foremost for investors in Voyager, you’re getting in at an early stage, when we’ve only touched the surface of the number of investors that will actually open crypto accounts, trade and hold crypto.”

The company is looking to expand its offering to the market, with ideas about debit and credit cards, margin on trading, a desktop version of the platform, and utility to its token all possibilities in the future, which will expand margins and revenue for every customer. 

“Then there is our geographic expansion. We’ve just recently announced we’re going to enter the Canadian market by the fall of 2020, and we have plans to enter the European market, the Asian market and the Latin American market right after. So our investors are really getting in on the early stages of where we’re going to be twelve months from now.”

The company’s Board is made up of co-founders Phillip Eytan and Gaspard de Dreuzy, in addition to Jarrett Lilien, former CEO of E*TRADE Financial and a long-time friend and colleague of Mr Ehrlich, who brings a wealth of invaluable capital market experience. There is a similar level of experience in the company’s management team.

“Gerard Hanshe is our Chief Operating Officer, a long term capital markets guy, and Janice Barrilleaux, who is also ex-E*TRADE, runs our compliance and has been with us a long time and has long-term experience in the capital markets. So we’ve got a really experienced team here, which sets us apart from a lot of other crypto-currency companies.”

One of the benefits of this experience is in a regulatory sense. The team understands what regulators want and need, from Know Your Customer to anti-money laundering rules, and the company does everything it can to abide by those rules.

“The other thing is, we have a breadth of connections within the industry as we keep growing this out, and we see that there are quite a few people that have transitioned from the traditional capital markets into the crypto and digital world. We use those connections, that experience, to broaden our network and expand what we’re doing and our product.”

The team at Voyager Digital is full of seasoned veterans, professionals who have been around the block. In Mr Ehrlich’s case, 25 years in trading has shown him the ups and downs of the business and helps him navigate issues more effectively.

“We’ve only really been in the market for about twelve months with our product at this point in time. We’ve seen tremendous growth in the quarter ending June [2020]”

“I was around the stock market in 2001 when it crashed, around the financial crisis of 2008 and saw what happened there, so I’ve navigated these waters in difficult times, either as part of E*TRADE or running my own company. You can’t dismiss how important that is when you’re building a public company from the ground up.”

This means the company knows when is the right time to launch products, when to pull back, when to look at expanding the team and when to contract. Having gone through the difficult market cycles, the team is helping set Voyager Digital up to be the most successful public company and the only successful agency broker in the space. 

“We’ve only really been in the market for about twelve months with our product at this point in time. From a near-term perspective, we’re expanding our customer base. We’ve seen tremendous growth in the quarter ending June [2020]. We’re expecting to see more growth in the quarter ending September.”

The company’s immediate goals are product expansion, setting up a desktop version of the product, and adding some utility to its token. The longer-term vision is geographic expansion into Canada and to add debit and credit cards.

“These are all within our near, short and long-term goals, and we think in building out our product, building out our business, growing to be a tremendously successful company, these are on our horizon.”

With Bitcoin now becoming the digital gold, the company is bullish on crypto. Especially in the US, where money is being put back into the economy, people are looking for alternative banking options, which at the moment are gold or digital gold.

“In this virus time that we’re in, in this pandemic, most people do not want to use dirty dollars. They want digital dollars. I think all this is starting the adoption of crypto-currency. That’s why I’m so bullish on this – people want alternatives to what’s in the marketplace, and I think they’re starting to realize what is there and how we get to the future.”

Mr Ehrlich is right to be bullish. As of June 30th 2020, Voyager has amassed over 230,000 global users across its platforms, and has preliminary unaudited revenue of approximately $1.1 million for the ending of the fiscal year, a staggering year on year increase of 1,159%.

“We’re extremely happy about the progress we’ve made at Voyager,” Mr Ehrlich concludes. “We’ve seen progress continue through the month of July, and expect it to exceed our numbers over the near-term.”

By providing secure housing, and offering trading and withdrawals for more than 39 digital assets to its customers, Voyager Digital is simplifying the crypto-currency process, making it more accessible to consumers. Find out more about Voyager Digital Ltd by visiting www.investvoyager.com

AdAlta Ltd (ASX:1AD) : Growing a multi-product platform

Feature - Dr Tim Oldham-AdAlta-ltd-Boardroom-Broadcasts

An ASX-listed innovative biotech company supported by an internationally experienced leadership team and world class scientific advisory board, AdAlta Ltd uses novel i-body technology to generate new drugs in settings where traditional antibodies struggle.

Founded in 2006 and listed on the ASX (ASX:1AD) in 2016, AdAlta is a micro-cap which has a market cap of $13.12 million as of May 25th 2020. The company has pioneered a technology that mimics the shape and stability of a crucial antigen-binding domain found in sharks and now developed as a human protein, resulting in a range of unique compounds, known as i-bodies, for use in treating serious diseases. Boardroom Broadcasts spoke recently with CEO and MD Dr Tim Oldham to discuss AdAlta’s unique i-body technology, the Phase I clinical trials for its lead product, AD-214, which will commence in July 2020, and future plans to open up more revenue opportunities by using the i-body platform to create more drugs both alone and through partnerships.

Unique i-body technology

“AdAlta is what’s known as a drug discovery and development platform company,” Dr Oldham explains. “We use our proprietary i-body technology to discover drugs against biological targets which cause disease.” 

After discovery, the company develops these drugs through pre-clinical development and into the early stages of clinical development, usually until Phase I or II, when it looks to partner them with larger pharmaceutical companies to complete development and commercialise the drug.

“We were founded in 2006, and the technology has been developing since then. We were listed in 2016, and we have a great mix of investors supporting us. They range from high net-worth individuals to institutions, such as Platinum Asset Management, and our founding venture capitalist, Yuuwa Capital.”

The pharmaceutical industry is constantly looking for new drugs against biological targets that are implicated in causing disease. Hundreds of these targets have proven very difficult to drug with traditional pharmaceutical methods.

“Our technology is specifically designed to engage the targets that traditional therapies are unable to handle effectively,” Dr Oldham says. “We can do this more selectively and more specifically and generate highly specific biological and physiological outcomes than other technologies.”

AdAlta’s lead product, AD-214, targets a biological receptor, CXCR4, which triggers cells of various types to move around the body, including blood stem cells, which generate red and white blood cells, and fibroblasts and fibrocytes, implicated in the scarring following injury, known as fibrosis.

As AdAlta is focused on the fibrosis side, it doesn’t want to mobilise stem cells. Traditional drugs against CXCR4 have been unable to distinguish between cell types. The only approved drug targeting CXCR4 engages other receptors as well, creating off-target effects, and isn’t specific in the different cell types it mobilises.

“Our drug, AD-214, is highly specific for CXCR4, so we don’t have those off-target effects, and we don’t mobilise stem cells, and this means AD-214 can be used for chronic treatment of fibrotic diseases, such as lung fibrosis.”

The process of creating drugs with these precise, selective effects comes down to the underlying i-body technology and how it was designed. There are many companies out there capable of discovering new antibody drugs, but there are not many that are utilising this kind of technology.

“Our i-bodies are part of a small group of antibodies known as single-domain antibodies, and there’s only a really small number of companies working on these around the world today. In our case, i-bodies were developed from the basic research into the shark immune system that had led to the founding of the company.”

AdAlta knew that sharks have a unique feature of their immune system which makes their antibodies smaller and with longer binding regions than humans, meaning they can access receptors or antigens in unique ways, leading to novel outcomes.

“We’ve managed to create a human version of that, by finding a human protein that maps onto the shark system, and that’s our i-body advantage – the unique structure of our i-bodies that can hit these receptors in ways that are useful and different to the way the traditional antibody approach works in a fully human format.”

Multiple product pipeline

The work AdAlta is doing represents a significant opportunity for investors, as the i-body technology is known as a platform technology, meaning it can support discovery and development of many drugs for a wide range of different diseases.

“There are hundreds of targets, just in the family that we’re particularly interested in, that haven’t yet been drugged or drugged effectively. So, we have this platform that’s got multi-drug potential, and yet today we’ve only got one product. Our lead product, AD-214, has just been approved to enter clinical trials for the first time.”

This approval is a major turning point for the company, as it is the first time it has demonstrated it can take a drug all the way from discovery into clinical trials. It is also the first time the complete data packages on this drug have been externally reviewed and the decision made that there is sufficient evidence to support it moving forward into human trials.

“These trials, importantly, validate the entire platform, not just the AD-214 product,” Dr Oldham says. “So what investors and our shareholders are looking at today is essentially a company that is being valued and looked at as a single product company, but with this enormous multiple product pipeline potential in front of it.”

On top of that, by moving into trials with AD-214, value is being added to that product specifically. The drug is being developed for a very serious disease called idiopathic pulmonary fibrosis (IPF), which is a scarring of the lungs that causes tissues to tighten and stiffen, making it difficult to breathe.

“Patients with IPF have about a four-year survival from diagnosis, and there are no good treatments today. The only two drugs approved slow the progression of the disease, but that’s it. So there is an enormous demand for new therapies. Big pharma companies are actively looking for products at Phase I, which is now where we’re up to with this product.”

The current COVID-19 pandemic is having a serious effect on these already vulnerable patients, as increased fibrosis in the lungs is one of the side effects of the virus, making it all the more timely that these treatments become available.

“We’ve achieved the most significant milestone that we’ve been aiming for, which is to transition AD-214 from pre-clinical to clinical development,” Dr Oldham says. “It’s wonderful to be able to describe AdAlta as a clinical-stage company now. This is a major inflection point in any company’s existence.”

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Evolution of shark antibody system into a human protein with unique binding region retained (i-bodies)

The focus now turns to executing the trial, and there is still a fair bit of work to do in that process. The company is actively developing some new imaging agents to help get more information out of the trial once it moves to the patient stage.

“We’ve laid out in March this year a vision for where we want to take the company over the longer term. So in the near term there are a number of steps we need to take in order to get ourselves expansion ready.”

The company’s growth strategy is a simple one: to repeat multiple times over what it has already been doing. In order to do that it needs to scale its processes, and there are some continuous improvement initiatives in the platform that need to be implemented.

“We have some additional experimental work to start discovering binders to new targets, to select those new targets in the first place, and to do some work to prove the ability to extend the indications of AD-214 to other fibrotic diseases beyond lung.”

The near-term for the company then will see results of the AD-214 clinical trial and a lot of preparatory work, with the aim of having five products in development in the internal pipeline and more indications and licensing partnerships for AD-214 by 2023. That will be just the start of the opportunity with the i-body platform, however.

“The other opportunity to develop drugs is to partner with other companies to co-develop drugs where they bring the target and the biological expertise. We have one of those in place today with GE Healthcare, and by 2023 I’d love to have three or four more of those, and that’s really a focus of our business development efforts over the timeframe.”

“Today, it’s all about AD-214,” Dr Oldham adds, “tomorrow it’s all about setting the groundwork for choosing indications and new product pipeline targets, and in the longer-term it’s about expanding the business that we do today multiple times over.”

Diversity of experience

The company is proud to have a diverse and experienced leadership team, including members who were involved in the design of the original technology, most importantly the company Chief Scientific Officer Mick Foley, who was one of its inventors.

“That’s backed up on the executive team by a Chief Operating Officer, Dallas Hartman, who’s responsible for protein development, and is deeply experienced in large protein therapeutic companies like CSL.”

New management strings have been added for the clinical stage, including Claudia Gregorio-King, who has worked in clinical research organisations and has been responsible for project managing numerous clinical trials, and Kevin Lynch, a former Vice-President of Clinical Development at Celgene and Novartis.

“Then on the board we have people like Robert Peach, who developed a single-domain antibody company called Receptos, was a founder of that and eventually sold it for a very large exit in the US, and brings both US location as well as the experience of building a company just like ours.”

The company is also represented by the founding investors on the board, including Liddy McCall and her alternate, James Williams, from Yuuwa Capital, and Paul MacLeman, who is well-known in the Australian biotech industry, having led numerous biotech companies.

“We also have a scientific advisory board that’s drawn from former Novartis and Pfizer executives, two of the largest pharmaceutical companies in the world, [that] have led respiratory medicine and antibody discovery and development organisations within [these companies] all the way through to clinical development over their careers, and they provide us with access to people and expertise that we would struggle to find as quickly on our own.”

When Dr Oldham joined the company in October 2019, the biggest challenge was in realising the opportunity offered by the scope of the platform, while also moving forward with the important ongoing development of AD-214.

“That diversity of experience across our leadership brings more effective problem-solving expertise to all of the problems you meet to grow a biotech company that burns cash at potentially fearsome rates. We have access to capital markets and how to raise capital, we have expertise that helps us make the critical decisions to make sure our development programs are right first time.”

Dr Oldham admits that the company can’t eliminate the natural risk of working with biological variants, but it has the expertise to control design and sequencing to ensure the right experiments are being done in the right order to get quicker results and avoid wasting shareholder money on experiments that won’t produce useful data.

“I’ve been working in building new businesses in both larger companies, Mayne Pharma and Hospira in Europe and Asia, and then in smaller biotech companies, cell and gene therapy companies, antibody companies, for the last twenty odd years,” Dr Oldham says.

The challenge that exists for all of these company types is the staging of business growth, working out at which point it is wise to invest hard and when to have the confidence to take on a risk managed investment.

“The key to doing all of that, for me, has been when you’re choosing a product or designing a product, what’s the end market going to look like? You have to start with the end in mind. This is why we’re taking such a staged approach to the selection of our next targets.”

In respect of AD-214, the company may have selected it serendipitously, and Dr Oldham knows it must be more thoughtful in future to understand exactly what kind of product it is trying to develop and maximise investments along the way.

“I joined AdAlta eight months ago with an amazing opportunity to take a single-product company and turn it into a multi-product platform,” Dr Oldham says. “We’re in the process of realising that. The approval recently of our first clinical trial is such a huge milestone for the company, and it really is the catalyst that I’ve been aiming for over the past eight months, and our team and shareholders for much longer, to enable us to unlock the amazing growth strategy we have ahead of us.”

With the unique potential of its i-body platform, an existing product for IPF moving into clinical trials, and a firm plan for long-term growth, AdAlta is only just beginning its exciting journey. Find out more about AdAlta by visiting http://adalta.com.au/

Reforming the current dislocation of financial markets

asx-Grant-Lovett-Ken-Chapman-In-The-Australian-Business-Executive

Mark Twain once famously quipped “history doesn’t repeat itself, but it often rhymes”.  The current dislocation in financial markets as a result of the COVID-19 pandemic looks on the surface unique, but there are echoes of the past in the present.  

In this context, let’s hope some of the lessons from an earlier crisis are better learned now.  Most especially, action to help corporate Australia reduce its reliance on banks and offshore markets for funding.

During the GFC, banks had limited ability to expand their balance sheets for corporate lending. In fact, they had to recapitalise to ensure ongoing viability. 

Capital rules enacted since then to ensure that they are “unquestionably strong” have meant the banks entered this current economic crisis in a very strong position. Yet corporate Australia’s dependence on banks and offshore markets for debt financing has often meant that only domestic equity raisings are possible during times of stress.

Of equal significance is the heavy weighting towards equity markets among retail investors – a rare situation within developed economies. The benefits of a more diversified investment strategy are especially highlighted during times of financial stress.

If we are not to waste this crisis, there has never been a better time to ensure that Australia’s sizeable domestic savings pool is also available to efficiently provide debt financing to Australian corporates. 

While there are domestic corporate bonds issued over the counter (OTC) and purchased by wholesale fixed income fund managers, these are in the main not accessible to retail investors.  

Now’s the time for reform. 

ASX welcomes the current parliamentary inquiry conducted by the Standing Committee on Tax and Revenue (“The Inquiry”). While the Inquiry was already underway prior to the market disruptions caused by COVID-19, the current situation highlights why we should not delay in putting in place the reforms that have been recommended by a number of earlier reviews. 

How we got here

Some changes were made in 2013 by then Treasurer Wayne Swan to create the Simple Corporate Bond regime. However, the more significant reform argued for by the industry at that time was not fully implemented. 

The modest reforms that were put in place had minimal impact on market development, with extremely limited take-up of the new regime’s disclosure requirements. Some have argued this shows that a deep retail bond market is not viable or possible in Australia. But given the impediments that still exist, it is surely too early to reach that conclusion. This is particularly so when the benefits of such a market development are so attractive to both investor and borrower.

Financial System Inquiry (“FSI”) – 2014

The FSI recommended that the government further ease disclosure requirements for large listed corporates issuing ‘simple’ bonds and encourage industry to develop standard terms for ‘simple’ bonds. 

The government responded to this recommendation with an agreement to “develop legislative amendments to modernise and simplify disclosure requirements for large corporates issuing ‘simple’ corporate bonds to the retail market” and work “with ASIC and market participants to assess the need for further improvements to support the corporate bond market.” While the government’s response to this was originally due in mid-2016, it is certainly a case of ‘better late than never’ to see in last year’s federal budget that the matter is now being reviewed by the Standing Committee on Tax and Revenue.

Why is there a lack of retail bond issuance?

It’s unwise to be definitive about what is holding back the development of a vibrant retail corporate bond market. Clearly, there are some major structural reasons which complicate the picture, but at the same time, there are definitely some impediments, which if removed, will give the market the best chance to grow.  

Ease of access to offshore markets

Corporates in Australia with a good credit rating are able to tap both the public and private placement 144A market in the United States, as well as raise debt in other offshore markets. This has been helpful for corporates over time, especially to diversify funding sources.  However, in times of stress – such as the GFC – this has proven problematic and/or expensive. It also comes with a cost if the funding is required in AUD – a cross currency swap has become very expensive as a result of reforms in the OTC derivatives market since the GFC.  Changes to collateral requirements due to non-central clearing and credit charges are examples of such changes. Cross currency swaps also require systems to manage the risk and come with mark-to-market complications that would not be faced if debt was raised within Australia.

Alternative interest bearing investments, bank deposits

With APRA’s liquidity rules and competition for term deposits, rates in this market are quite attractive relative to the RBA cash rate and other short-term highly rated investments. 

This situation will not change any time soon. However, what should be noted is that these returns are normally only available out to about six months, rather than giving investors a known income stream for a number of years – something that corporate bonds can offer. Corporate bonds would also offer debt investment opportunities much broader than just to the banking sector.

Importance of investor education about corporate bonds  

Australia has clearly been an equity loving nation historically. There is a view that retail investors understand equities better than debt. But surely this is an argument for further education rather than reinforcing bias through restricting access to debt products. The opportunity for retail to invest in high quality, interest-paying instruments has traditionally been limited to products like term deposits.

Taxation

The difference in the tax treatment between equity dividends, via the franking system, and interest received from debt products like bonds, for example, is also relevant. Investors pay tax on interest at their marginal tax rate, while tax on dividends is paid on their marginal rate less the attached franking credit (usually the corporate tax rate). 

Often, this means that there is a refund available to retail investors where the marginal rate is less than the corporate tax rate (such as in SMSFs). This makes the after tax return of equities relatively more attractive than interest. 

ASX notes the taxation issue for completeness, and is not suggesting any change is feasible or recommended in this complex area of public policy.

So what can be done to give the market the best chance of success?

Even if all these hurdles could be overcome, issuers may still be reluctant to access the market, including due to impediments in the Corporations Act.

These have been flagged previously to governments of all persuasions and remain the essential ingredients for real progress in market reform and retail investor participation.

In ASX’s view, the reforms recommended below are incremental, modest and non-controversial. 

In essence, the proposals seek a gradual opening up of the retail market for the issuance of simple senior listed bonds by the most creditworthy public companies, with investor protections leveraging off the existing robust corporate continuous disclosure regime. 

The key matters for regulatory reform can be summarised as:

  • Relying on existing continuous disclosure to allow more flexible and cost-effective disclosure for listed bonds. In particular, recommending that ASX 200 companies be allowed to list senior bonds with a term sheet and cleansing notice (no prospectus).
  • Permitting early redemption of bonds to align with OTC issuing terms. 
  • Building on the Simple Corporate Bond regime by fixing a number of anomalies.

ASX will be making these arguments very strongly in our submission to the Inquiry.

The Future

As the health crisis begins to abate and the economic costs are realised, the government will be looking for reforms to facilitate an economic recovery and bolster the future.

This must include a serious discussion about the development of the retail bond market and the role it can play to strengthen our economic credentials.

The current Inquiry is the best opportunity for this to be considered. It will require both political will and industry solutions. This combination will give reform the best chance of success and lead to great outcomes for the Australian economy in the years ahead.

Ken Chapman is Head of Strategic Delivery, Capital Markets, and Grant Lovett is Head of Government Relations for the Australian Securities Exchange (ASX), www.asx.com.au.

Digital Investment Group: Blue Sky strategies

Feature - Steve Prideaux-Boardroom-Broadcasts

An Australian Public Company with over 300 shareholders, Digital Investment Group (DIG) was formed in 2016 with a clear focus to grow a portfolio of quality platforms that are either purely disruptive or complimentary to existing platforms.

Steve Prideaux is the founder and CEO of DIG, an investor, inventor, and incubator of technology. DIG focuses on three areas of speciality: digital development, financial services, and incubation and innovation, and strives to provide cutting edge and disruptive solutions to an ever-changing marketplace. Mr Prideaux has over 30 years of management experience, starting his career in local government finance, before going on to establish his own chain of retail home entertainment stores. In the space of a few years he grew the chain to be one of the industry’s most prestigious and profitable brands, winning numerous national retail awards for excellence. Mr Prideaux spoke to The Australian Business Executive recently about his own entrepreneurial and business background, a current takeover bid from an ASX-listed company, and the Blue Sky strategies that differentiate the group from its competitors.

Entrepreneurial journey

“I really started my life in accounting and finance in local government,” Mr Prideaux says. “I pretty quickly figured out that the public service, whilst it was comfortable, wasn’t really the place for me. It took me on a journey into private enterprise, and very quickly I got involved in the early days of the video industry.”

Mr Prideaux admits that the business at the time was an incredibly lucrative and exciting one, with some extremely profitable video stores running in the early days of the industry. This gave him the opportunity to become very entrepreneurial, to develop strategies for improving profitability and increasing investment to create new stores.

“[That] took me on a journey to ultimately having my own franchise chain of about 30 stores, which I ultimately sold to Blockbuster, and had a few wonderful years of my life on their international executive team, travelling the world and running 400 stores in Australia, plus several stores through Asia.”

This gave Mr Prideaux a solid grounding for early stage entrepreneurship, which then developed into working within the confines and structure of a NYSE listed company, where he learned to contend with the rigour of corporate governance and writing decision logics.

“I guess that really catapulted me into corporate life, but with a strong entrepreneurial bent. Through that time I’ve nurtured lots of start-ups and invested in plenty, so I’m really a passionate brand-builder. I love building and creating companies and hopefully sustainable legacies for the people who are involved in those.”

There are couple of golden rules Mr Prideaux has learned over the years, which have helped him reach the level he is at and to maintain his own success. One of these is the idea that ultimately people want to do business with people they like.

“Be a likeable person. I learned that at an early stage when I was setting up my franchise chain. We were industry-focused, passionate about branding and marketing, and yet we found that we were getting spoiled by the film studios. We were being nurtured by the marketing directors, because they were passionate about the business and our vision.”

The second key thing he has learned is the importance of taking care of human resources. Mr Prideaux has maintained close relationships with many of the people he has worked with over the years, mostly by taking an interest in their careers, which has enabled him to help people find what they are truly interested in doing.

“That often means leaving your organisation and pursuing your career somewhere else,” he says, “but that’s okay. Not everybody stays forever. What’s really important is that they contribute to your business when they’re there, and they think about the business warmly when they leave.”

Digital Investment Group

“Essentially, we’re an IT company that has grown into becoming a broad owner of a number of IT assets, and during that time we’ve streamlined that operation into three clear visions [digital development, financial services, incubation and innovation].”

Formed in 2016 as a public company, DIG has a broad and diverse range of subsidiary companies, and a clear focus on growing a portfolio of quality platforms that in most cases are either purely disruptive or complimentary to existing platforms.

“Our bread and butter is technical capability. We build things. We build apps, we build software, we build APIs, we build platforms and those sorts of things. Part of that journey led us into the financial automotive services, where we have another division.” 

In the financial space, the firm offers bespoke software platforms, white-labelled salary packaging, vehicle wholesale trade exchanges, and a very interesting disruptive platform in the online virtual mortgage brokering space.

“When you’re in the IT space, you tend to attract a lot of interesting conversations from start-ups and people with great ideas. Through that we’ve grown this division, which is our incubator accelerator. We get involved in early stage start-ups and help guide them, and they either become clients or they become partners in our business as we go through that process.”

DIG is in the process of taking the company public, after starting its life as primarily an IT company with a hotchpotch of investments. The idea was then to tidy the structure up to give maximum value to shareholders.

“We ended up being taken over by a public company about four years ago, which was the birth of Digital Investment Group, and our intention through that was to build up the platform, the business and the profitability, to take it public and list it under its own right.”

DIG Editorial image-Boardroom-Broadcasts
There are couple of golden rules Mr Prideaux has learned, one of these is the idea that ultimately people want to do business with people they like

During that journey, the firm developed a strategic relationship with a corporate advisory team, which introduced them to some other businesses, one of which is a currently listed business that has recently submitted a takeover bid.

“We have an existing ASX-listed company making a bid to acquire all of our business, but it’s really like a reverse takeover. We’re the larger party, so we will end up being in control of the entity, but it’s delivering a really tangible outcome for our shareholders to materialise investment from an off-market situation into an on-market, tradeable position.”

The company is involved with strong investors and backers that will help DIG sustain growth in the future, but also further investment into some of the projects, including an exciting early-stage incubation. Mr Prideaux has been asked to continue in his role as group CEO post-takeover.

“That all will come to fruition over the coming months. Obviously, as it’s an interesting time in the market at the moment, we’ll choose our time very carefully as to when we elect to commence trading on the ASX. But it’s a very exciting time for us.”

Blue Sky strategy

The company has a wide-range of tangible products, but most importantly it has early stage access to Blue Sky strategies, in particular three or four early-stage concepts that the company believes are going to accelerate massively in the coming year.

“We’re not being bullish and putting out forecasts and those sorts of things about it, but quietly we’re really passionately excited about genuine disruption and genuine game-changers in established marketplaces.”

Once the company’s ASX listing is finalised, the expectation is that the outlook will include a period of pure growth. This will begin with the commercial launch of a couple of DIG’s biggest projects, such as the virtual broker platform and the trading exchange in the automotive space.

“They’re huge, they’re both pure disruption,” Mr Prideaux says. “This is a time when business is light on resources and light on staff, scaling down, and we can come to them with digital solutions to revolutionise the way that they work, operating from a very low cost base. We think we’ve got a lot of advantages for our investors in the next six months.”

Once the group is in a listed environment, there will be a huge opportunity to raise capital and to create a fund where DIG can really invest in incubation for projects it is fiercely passionate about, which has not been the easiest to achieve widely under the previous model.

“We see so many start-ups and so many good concepts, that come to us and you just can’t find funding for them, and you know it’s a sound idea. Commercially, there is no reason why it won’t be a success, they just cannot find funding. We’re pretty risk averse in investment circles in Australia, hence why a lot of these guys end up overseas.”

At the time of talking with Mr Prideaux, the world is in the midst of the Covid-19 pandemic. With a large proportion of the global workforce currently working from home, the pandemic has been a game-changer for businesses, which have very quickly found out whether or not they can operate remotely.

“I think that’s going to dramatically change the landscape. We’re very interested in the emergence of AI and machine learning, and we’ve got some very talented young people who are leading that process for us. That’s part of the engine behind a couple of these new platforms that we’re building, which essentially can change the way businesses operate.”

For example, many car dealerships will be paying a finance officer $180k annually to write loans, when all they really need is access to a laptop so they can connect to an online digital broker. They will be taken through an application process for finance, with integrations back to its panel of lenders, and in many cases get instant approval.

This system can be used by dealerships that never had the luxury of affording finance managers – such as caravan dealers, boat dealers, and those in the residential space like kitchen builders – helping them revolutionise their offering. 

“Those businesses that are capable of adapting to change are going to be huge beneficiaries of the platforms that we’re delivering. I think the current state of the market, with businesses going into hibernation and reduction of resources, puts us in an incredibly strong position to capitalise on the momentum when that curve starts to turn.”

Many of the products the company sells are available from others across the market, but Mr Prideaux believes that DIG’s real difference comes in its core disruptive platforms. Most importantly it comes from its incubation platform, which it calls ‘Start Up in A Box’. This usually applies to people in the early stages of their journeys. 

“They might be an IT guru, and they know how to build an app, but they don’t know how to do a financial model or a marketing plan, apply for a trademark, set themselves up in a corporate structure and protect their assets. Or they might have a really good sense of business savvy to be able to do some of those things, but know nothing about IT.”

DIG utilises its internal resources within the group to assist these start-ups and work through that, going through an early stage evaluation process where the firm will either like the idea or not.

“If we like it, we’ll actually do things for free. We do it without receipt of tax, so we strike a deal where we take some early-stage equity in their business. Most of these guys don’t have access to cash; they’ve got a great idea, and if they had a bit cash they probably will have spent it already trying to further and develop their ideas.”

This is the group’s USP. DIG essentially wraps the start-up in a box and gets them ready to meet investors. There are lots of people out there trying to get as much financial gain out of start-ups as they possibly can, but DIG has no interest in dealing that way.

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“This is a time when business is light on resources and light on staff...We think we’ve got a lot of advantages for our investors in the next six months.”

“We’re really passionate about helping them get ready, and genuinely partnering with them in the business. During that time it gives us the opportunity for a couple of things. One is to really understand the business and its capability, but the other thing is to really understand them as a budding entrepreneur.”

For investors this is an invaluable process, as the group is able to get in on the ground floor on a start-up, seeing the idea develop from its very earliest stages and being able to protect the investment at any stage by injecting more cash into it.

“If we find that magic formula that we like the people, and we believe in their ability to deliver their vision, and we like the platform, it gives us the opportunity then to put up the early-stage capital that the business needs to go to the next stage. I don’t know anyone else in that space that actually does that.”

“[The incubation platform] is a part of the business that really drives and motivates me,” Mr Prideaux says. “I get the most pleasure out of the emerging tech and helping people really see their dreams come to reality.”

In the uncertain environment created by the pandemic, Mr Prideaux admits that business is a little surreal right now. The group has closed the office and is implementing a work-at-home policy, an unprecedented step that never before seemed likely.

“Businesses right around Australia, right around the world, are experiencing this at the moment. We’re going through changing times and unchartered waters, and the level of support from the governments is unprecedented, in terms of the things that need doing to stimulate the economy and to enable businesses to continue to thrive.”

Conversely, Mr Prideaux feels a certain excitement around the present situation, with DIG being at the grassroots of a number of game-changing and innovative platforms that will help the group come out of this situation in the coming months.

“Now is the time to be bold; now is the time to be brave; now is the time to be innovative, and there is a lot of that lies within the IT sector. So I’m sure that we will continue to grow and continue to develop and be in a position to help many of those businesses rediscover new ways of doing things.”

With its diversified portfolio of IT investments, and the further growth of the company through a takeover bid, the current business landscape is a challenge DIG is well equipped to face. Find out more about Digital Investment Group by visiting https://digltd.com.au/.